When there is a Junior Lien (secondary mortgage) that is delinquent more than 120 -180 days a creditor may choose to charge-off the debt owed. A charge-off is the declaration by a creditor that an amount of debt is unlikely to be collected. In doing so the creditor is able to write off the full amount on their taxes and claim it as a loss. A Charge-Off does hurt your credit and can stay on your credit report for up to 7-10 years.

It’s important to know that it would be rare for a 1st lien to charge off because of their adequate assurance in the value of just the land but who’s to say it’s not possible. When a lien is charged off it is often transferred to a... For the entire article click here

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